Businesses shift from exports to home market
Updated: 2008-02-28 17:26
On January 1, China started a temporary-quota policy on the export of wheat, corn and rice powder to guarantee an adequate domestic supply.
"Global staple food supply has been tightly balanced," said Liu Longheng, a Beijing University tax law professor. "China must give priority to feeding its 1.3 billion people. It is natural for the government to control grain exports. It is even likely to take further measures to harness exports of processed grain products."
As the local market calls for a greater supply of grain, Zhu Yihuai rushes about the cities of Hangzhou, Zhoushan and Fuyang, the leading grain markets in Zhejiang, to sell off his stored grain to private grain merchants.
"It is the peak season for grain. Private grain sellers compete vigorously for sources of goods. We are in a good position to sell grain at good prices."
Zhu, who is in high spirits, also visits grain shops and supermarkets in a spate of cities and counties to promote his brand as a grain agent. He has even extended orders to the neighboring grain producing provinces of Jiangsu, Anhui, Jiangxi and Shandong to set up steady supply-and-demand relations.
As shown in the Purchasing Managers' Index, an indicator of the economic health of the country's manufacturing sector, in January China's export orders index shrank for the first time in the past three years. Its export growth was expected to drop to 18 percent in 2008, compared with 25.7 percent in 2007.
Industry experts welcomed the trend that more export-oriented businesses have returned to the home market.
"The accelerated return of export-based enterprises, particularly those in the CPI-weighted textile and grain sectors, will undoubtedly help stabilize domestic prices and ease inflation worries," said Zhang Xiaoyu, an international market research fellow from the Ministry of Commerce.
However, sales in domestic market will not always enjoy a royal road. According to Zhang Yang, the Zhejiang knitwear exporter, to sell products in the home market his business had to go through complex examination and approval procedures to change from its previous corporate identity of an enterprise dedicated to processing materials supplied by clients to a common Sino-foreign joint venture.
It must also tap into the mid- and high-grade home markets with high quality and added values.
"The Chinese market is no smaller than the EU and the United States. We may first cultivate our own brand by boosting our business on the domestic retail market. After that, we will export products under our own brand," the garment baron said.
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